Topical items and views on the impact of digitisation on publishing and its content and the issues that make the news. This blog follows the report 'Brave New World',
(http://www.ewidgetsonline.com/vcil/bravenewworld.html ), published by the Booksellers Association of the UK and Ireland and authored by Martyn Daniels. The views and comments expressed are those of the author.

Wednesday, August 27, 2014

We have long argued about the logic of joining up the media
dots. Some see this as merging the technology and using one technology architecture
to deliver all services. Others see the services as remaining separate and
simply offering a ‘one stop’ consumer umbrella, which collectively makes it
difficult to compete with.

This week Amazon has acquired games streaming service Twitch
for a cool $1 billion ($973 million). Twitch claims to be the fourth largest generator
of peak load Internet traffic, which is greater than Hulu, Facebook and
Amazon. According to Twitch it has
quickly become the go-to-platform for the fast growing video game-streaming
market. In July they claimed some 55 million unique monthly viewers.

Amazon’s media offer now includes physical books, ebooks,
singles, print on demand, rare and used books, audio books, lending and
subscription services streamed music, CD music, downloaded music, film rental
and streaming, games and game streaming much much more. When you recognise that
these can all be offered under one subscription service, Prime, as either
supplemental services or the main offer, the picture changes. Kids Free Time is
the only service Amazon has collectively offered under one proposition and subscription,
but it isn’t hard to see many more such offers. Prime also unlocks the world of
Amazon’s marketplace, goods of all sizes and shapes and a growing digital offer
and physical delivery service which has collection points, same day delivery
and again much more.

So is about building a ‘one stop shop’ and owning the
customer’s first point of choice and if Amazon hasn’t got it, then its
marketplace probably has. This now begs the question of why we bother to search
on other services and don’t just go to Amazon first every time. After all, we
will be soon conditioned to believe that that’s where we will probably get the
best deal on everything and anything. Amazon gets first crack at unlocking our
purse and getting our money and if the sale goes elsewhere through marketplace then
they still get a cut.

So what about media and content? We know Amazon wants to
take out the middle man. It is also becoming a producer, publisher,
commissioner and much more across many media forms and not just selling books,
films, etc. Does it want to be the only one? That would not make sense and
would be unrealistic, but it will go for the quick wins and importantly go to
win the hearts and minds of the self-publishing and creative-direct route.

What we have is an omnivore, which in its habit is creating
a compelling consumer and creator proposition which is hard to avoid. No one
only reads books, watches films or plays games and fighting a beast gets harder
when it’s not just about one offer. Importantly the sum of the parts is its
strength and that is not just with consumers, but with its competitors.
Competitors and providers who have only a slice of the offer, have just that, a
slice. They have to do that not only better than Amazon, but better than the
rest who are fighting for that space. Niche is fine and can be very profitable,
but it is just niche and growth is limited.

If you want to grow outside of the niche you have to find
others who can help replicate what Amazon is doing internally. That’s Amazon’s
potential weakness in that it has brought its offer inside. The companies may
well operate separately but they are owned by Amazon. To compete then someone
has to collect the same, similar or others into a group that acts as one but
who remain separate. There are many opportunities but often little or limited
vision or appetite for co-operatives.

To those who are searching for the synergy between Twitch
and books and other media, forget it. The game is about creating a unique,
compelling and universal offer and if it also provides some synergy then that’s
a bonus.

Tuesday, August 05, 2014

How do industry bodies and major players respond to new
entrants who offer something different? Do they go out to squash them in order to
maintain the status quo? Do they attempt to reign them in and restrict their
influence and impact? Do they invest in them and work with them to create new
channels, new markets and new revenues? Some believe that many stick their head
in the dark and wish them to go away?

This last week we have all read the Amazon
Press Release over their ongoing battles with Hachette and one of the most relevant
statements came right at the beginning in their reflections of the current
consumer offer.

A key objective is lower e-book prices. Many
e-books are being released at $14.99 and even $19.99. That is unjustifiably
high for an e-book. With an e-book, there's no printing, no over-printing, no
need to forecast, no returns, no lost sales due to out-of-stock, no warehousing
costs, no transportation costs, and there is no secondary market -- e-books
cannot be resold as used books. E-books can be and should be less expensive.

The somewhat throwaway line that caught our attention was
that, ‘there is no secondary market ebooks cannot be resold as used books.’ With
the revelations earlier this year about Amazon’s used ebook patent, we know that
it has had its eye on this opportunity, but that the first sale doctrine is
maybe a battle too far today. But used ebooks are almost certainly to happen
and the change will be either driven by consumer demand or other start-ups who are
prepared to push the envelope. It took the likes of Waterstones, Dillons and
others some three years from starting to discount in 1991, to the collapse of
the Net Book Agreement in 1994. It took years of patient lobbying for the B&Q
and other large UK retailers to open up Sunday trading. It took years to change
UK licencing laws. Things change in time and they change in favour of public demand.

Last month a judge for the District Court of Amsterdam ruled
that Dutch used ebook reseller, Tom Kabinet can continue to operate while it is
being sued in court by the Dutch Trade Publishers Association. Tom Kabinet enables users
to resell DRM free and digital watermarked ebooks.

The Tom Kabinet site
takes a 10% commission on all ebooks sold and have offered to pay a 5% royalty on
all sales to authors for each ebook sold on their marketplace.

However, Tom
Kabinet like the used l digital music service ReDigi are also up against
EU legislators and a strong lobby. Although ReDigi is still in operation today,
and have been awarded a patent earlier this year for their
marketplace platform they have had to adapt their service in light
of losing legal battles.

When Napster first threatened the music production business,
the industry fought back through the courts and set out to shut down the new file
sharers. The propaganda PR and lobby machines were wound up and the sound bites
and messages broadcast. The political lobbing started as the industry set out to shut down the new file sharers
before they could establish themselves. The problem was Napster was free and
consumers made it go viral.

The music industry won its battle with Napster, but then had
others to deal with who had watched the Napster battle and learned new tactics.
Although the music business kept winning they also kept losing and by the time
they tried to get the Napster brand under their umbrella it was too late and
the stable door was wide open.

The music streamers came next. First there was Spiral Frog
who failed to deliver, but they were followed by Spotify and Pandora who did.
The big music producers had learned some lessons and bought into the service
but also tried to tame it and minimise the risk to their model. However they
failed to understand that the threat wasn’t free, nor was it sharing, but it
was about the whole ownership ethos that they had profited from for decades.
The streaming services asked why you needed to buy when you could access on
demand, from anywhere at anytime. Spotify with its 24 million users, of which 6
million are subscribers and the other services started to redefined ownership
and how we paid for and listened to music.

It’s amazing how long the music industry took to include
downloads into its charts and that they have only just opened the door to
include streamed music. Today 228 million downloads happen across the various
services every week in the UK and that is up from 142 million in 2013 and 67
million in 2012 (Official Charts Company). The maths of how many tracks on
average people download a week, is not hard to calculate and is significant. Some
41.5% of singles are streamed and 12% of the current top ten are streamed. The
UK alone has delivered a staggering 18.5 billion streams and in 2013 overall
market revenues from streaming pasted the $1 billion mark for the first time.
Interestingly, while streaming has experienced explosive growth the overall
revenues of the global music market have only increased by a mere 4.3% (IFPY
and Spotify).

We wonder how long it will be before they fully recognise
the impact YouTube has made and that some suggest that more kids now watch
their music today than listen to it. Interestingly, the success of streaming is
negating the demand for used digital sales and in a market where growth is
clearly in a new ownership model enabling secondary sales makes sense and will
generate further income for artists.

Change will happen and denying used digital media a second
life and sale will increasingly be seen as wrong and an untenable position by
the people that matter the consumers. Denying a second income opportunity also
impact creators at a time when their own first sale income is increasingly not
meeting their expectations and the pool is being shared with even more fish.

Unlike music, ebook consumption is relatively low and prices
relatively high and this will reduce some of the appeal of on demand ebook subscription
services. The book market will remain a mixed economy for the foreseeable
future with physical, digital, see through and subscription offers. Perhaps it time that publishers work with new
stat-ups to create and support a thought through and complimentary used ebook
market and not wait for the collapse of the restrictions they have today and
the chance that the result may not be favourable.

About Me

Before entering publishing I worked for many years as a Senior Executive in blue chip organisations in the retail, oil and automotive sectors. My publishing induction was initially as Director of Strategic Development at VISTA. There I was responsible for, and a contributor to, their highly acclaimed ‘Publishing in the 21st Century’ research series, the primary creator behind publishing services PubEasy and ‘batch.co.uk’, the initiator of the development of new Front Office systems to support publishers. In 2006 I joined Value Chain International(VCIL) initially as VP Marketing, Media and Publishing before becoming their President in 2009. In July 2011 the company's operations were acquired by Syncordia. I hold two non executive positions with publishing industry players Bibliophile Ltd and Haven Group and currently setting up Read Petite a service focused on providing digital short form material online via subscription.
Email mdaniels@opus57.co.uk